A seismic shift has taken place in the air cargo industry creating a “new normal” in which Middle East carriers now dominate the sector because of their significant investment, geographic location and keener efficiencies, says Qatar Airways chief executive Akbar Al Baker. He added that legacy carriers have a structure that is “incompetent” for dealing with today’s environment.
“Over the past 15 years there has been a seismic shift in commercial cargo landscape – the legacy airlines are losing market share while Middle East operators continue to grow thanks to the significant investment and geographic location of our hubs,” he said speaking at a recent press conference in Doha.
“Qatar airways has played a key role in changing airline cargo market for the 21st century and it’s now a leader in shaping the future by defining a new normal that is dominated by Middle East carriers. And you now know why other airlines from Europe and the US are screaming at us.”
Al Baker went on to say that the legacy carriers are losing market share because they cannot bring the same efficiencies that the Middle East carriers bring to the business which means they cannot give lower pricing to their customers.
“If we really look at these legacy carriers they cannot carry certain cargo at the prices we can carry because they have such a high overhead that they really cannot compete with really efficient airlines like Qatar Airways.
“There is a shift from legacy to us and when I talk about legacy carriers I’m talking about carriers that have been around for the last 50 or 60 years and they have created an infrastructure around them that really is today, incompetent to deal with the new market conditions that exist in which we play a very vital role.”
Qatar Airways recorded an average growth rate between 25-30 per cent every year over the last four years and the carrier’s rise to become the third largest cargo airline is due to the fact the growth in the last eight months has been “very, very strong,” said Al Baker pointing to a 30 per cent growth rate while the overall cargo market has been basically been standing still.
“We have, increased our tonnage in Germany – which is a market that is highly competitive – we’ve increased our market share by 50 per cent in just one year, we are now number five in Germany and currently number two in the Netherlands, we’re the largest in Norway with all the fish that is exported. So there are markets where we have a very strong position and where everyone tries to grab the market share, but we are successful and the growth will continue.”
And not missing the opportunity to take a dig at Qatar’s former investment, Al Baker added: “So now you can see what the huge opportunity Cargolux lost when we pulled out from our shareholding with them. I’m sure they will be biting their nails if they are listening to this press conference,” he said.
When asked what he would do if he were in the shoes of a CEO of a European airline, Al Baker relied: “I would not sit and waste my time lobbing the European Union, unions and employees against the competition. I would roll up my sleeves and take the competition head-on, but they can’t because they are more concerned at protecting their turf and making sure that they squeeze the maximum out of customers by giving them too little.”
On the need to liberalise air cargo markets, the QR chief noted that its difficult because as an airline it doesn’t have the leverage, the leverage only exists between governments to discuss the issue of liberalising the sector. Worse still, there is outright protectionism in many key markets, Al Baker points out.
“You know, when you go to Germany there is a very, very clear policy of protectionism to protect Lufthansa’s interest against the interest of the industry. We have been fighting with the German government to give us part of the air cargo access to other destinations including giving us the right to double, or triple our cargo services into Frankfurt and this has been constantly denied because of the strong Lufthansa lobby.
“France is the same – Air France has a very strong lobby and they restrict although they themselves are shrinking their air freight business, but they don’t want that vacuum that they are creating filled by other than their own partners, or by Lufthansa,” he says.
He went on to cite another example of protectionism, but with a twist. Saying there should not be any protectionism when it comes to trade, Al Baker gave the example of India which is highly restrictive on the passenger side, but completely open on the air freight side of the equation.
“They are extremely restrictive when it comes to passenger services, but where they have an an absolute open sky when it comes to cargo because they see the potential of air freight for growing the business,” he said.
